The Ardern government’s eco obsession leaves NZ facing blackouts sooner rather than later

New Zealand has serious problems with its power supply. There are three underlying reasons: the weather, a flawed electricity market and a drive for ‘net zero’.

Sixty-five per cent of New Zealand’s electricity is provided by hydropower, and the remainder by geothermal, gas, coal, wind and some solar. Though hydropower is often seen as the one form of renewable energy which is not plagued by intermittency of supply, it sadly isn’t true. The Telegraph has the story.

In a dry year, hydro’s ability to deliver falls away, and we lose about 10 per cent of our generation. In the past, we always tried to have the hydro reservoirs and coal stockpile full by the end of summer to guard against this possibility. When we switched to an electricity market, this was forgotten.

This year, we failed to refill the reservoirs, and levels are now unusually low. We are muddling along for the moment, but this is a difficult position from which to recover and there are likely to be blackouts at some point in the future.

The ability of our fossil fuel power stations to step into the gap has been severely restricted. We used to get 20 per cent of our electricity from gas-fired power stations, but six years ago, as part of their decarbonisation policy, the previous government banned further gas exploration, and we are now desperately short of gas. The new government is encouraging new exploration but we won’t see the results for several years.

We also have a single coal fired station with insufficient coal in its stockpile because our electricity market does not pay for the cost of maintaining an adequate stockpile.

The situation has been made worse by poor market design. New Zealand was one of the pioneers of electricity markets, and chose a risky model which has proved to be seriously flawed.

As a result, the problems this year have led to wholesale market prices rising to ridiculous levels of as much as £1/kWh. This has already caused some factories to shut down; others are under threat. The politicians are beginning to realise that the energy crisis could have serious effects on consumers, and there is speculation that they will be forced to intervene. This could mean instructing our gas and coal-fired power stations to run flat out day and night – which won’t make much difference because of the lack of fuel. Failing this, the only solution in the short term is rolling blackouts. and a public conservation campaign.

Read the full story here.